Late night wrangling and deal making has managed to bring the euro zone back from the brink of disaster and given policy makers at least an opportunity to work a bit of financial magic. This latest agreement on the euro crisis is the fourteenth such watershed point for Europe in this two-year crisis, but because it is a more broad-based solution than previous announcements, it might just be the elixir that Europe needs. The comprehensive plan rolled out a week ago called for leveraging of the continent's dwindling bailout fund to as much as €1 trillion to support cash-starved governments. European banks have been asked to accept a voluntary haircut of 50 percent off their holdings of Greek debt, with the assurance that they will be assisted to recapitalize. While the devil is in the details, the broad strokes of last week's agreement were enough to quell investor fears that a rout of all things Europe was about to occur.

Unfortunately, there is no plan to deal with the possibility that the European Financial Stability Facility (EFSF) runs dry at some future point in time, given the difficulty thus far of getting 17 countries to agree on increasing the size of the facility to €1 trillion. Further funding could be provided by the European Central Bank (ECB), however, there's been no announcement that the ECB is on board with the current plan.

Greece and Italy both have bloated government bureaucracies and highly inefficient labor forces which must be restructured for a lasting solution for what ails Europe . They both boast government employees that are accustomed to job security and intransigence. The Greek public sector represents about 40 percent of the economy and it must be restructured for Greece to avoid dragging Europe back into the quagmire.

Greece 's national debt has ballooned rapidly and it has been projected to reach 190 percent of gross domestic product (GDP) within a couple of years. But with this new European plan, Greece 's debt would fall to 120 percent by 2020. Even if Greece were to hit the 120 percent level, it is likely still an unsustainably high level, roughly equal to the depth of debt that Italy faces today. More deep and painful cuts and restructuring are needed before Europe closes the book on their debt crisis.

One key feature of the newest European plan is to force 70 European banks to raise their level of core capital to nine percent. To meet this newest requirement, European banks will need to raise €106 billion, according to the European Banking Authority. Further complicating the situation is the fact that Europe's banks are four times the size of U.S. banks, as measured on a total asset basis. Europeans use their banks for saving and investing much more so than Americans, who often save, if they save at all, in mutual funds and non-bank alternatives. Germany , Spain and other European countries are very over-banked relative to other global jurisdictions making them tempting targets for short sellers if and when euro zone worries reappear.

But for now, Europe 's more comprehensive plan to deal with the crisis seems to be placating markets. Since it will likely be at least another few weeks and perhaps as long as the middle of next year before the full details of the recent agreement can be analyzed, markets are likely to be more positively biased in the interim.

Europe has massive holdings of gold that could be used to buoy their financial system as they chart these uncertain times. Germany , for example, has the second largest holdings of gold bullion in the world—some 3,400 metric tons, while the U.S. has the world's largest bullion holdings, of more than 8,100 metric tons. For problem plagued governments, their vast holdings of gold could be the solution to what ails them. It's an asset that investors want and one which currently serves no purpose for these governments.

While confidence in Europe is currently riding high, issuing gold-backed European bonds could be a savvy move if investors' confidence in the euro itself or the European Union begins to wane. If, on the other hand, the ECB decides to play a role in backstopping the obligations of Europe 's indebted governments, then this will be good for gold as well. Gold, already the best performing asset of the last decade, is about to glisten once more. Shouldn't gold and gold producers be the bedrock of your investment portfolio?

Long-time readers will begin to notice a change in my newsletters and website over the next couple of months. In an effort to better brand myself I am in the process of converting Money Focus to an E-Letter that will be called John Stephenson's Strategic Investor and ReportonMoney.com will convert and become StephensonFiles.com to be consistent with my Facebook, Twitter and YouTube posts. I trust that you will bear with me during this change.

StephensonFiles is a division of Stephenson & Company Inc. an investment research and asset management firm which publishes research reports and commentary from time to time on securities and trends in the marketplace. The opinions and information contained herein are based upon sources which we believe to be reliable, but Stephenson & Company makes no representation as to their timeliness, accuracy or completeness. Mr. Stephenson writes a regular commentary on the markets and individual securities and the opinions expressed in this commentary are his own. This report is not an offer to sell or a solicitation of an offer to buy any security. Nothing in this article constitutes individual investment, legal or tax advice. Investments involve risk and an investor may incur profits and losses. We, our affiliates, and any officer, director or stockholder or any member of their families may have a position in and may from time to time purchase or sell any securities discussed in our articles. At the time of writing this article, Mr. Stephenson may or may not have had an investment position in the securities mentioned in this article